Wolf taking steps to expand who gets OT pay in Pennsylvania

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Stymied by Republicans in his effort to pass a law raising the minimum wage, Democratic Gov. Tom Wolf is moving to boost pay in Pennsylvania through another means — by making hundreds of thousands of additional salaried employees eligible for overtime pay, administration officials said Jan. 17.

The proposed regulation extending overtime to more salaried employees would need approval only from a five-member board that has a 3-2 majority of Democratic appointees.

The approval process could take more than a year, meaning that Wolf — who is seeking a second term in November's election — must get re-elected to ensure it stays alive. Raising the overtime threshold would strengthen the middle class, boost the economy and help make wages fairer, Wolf said.

“It's simple. If you work overtime, then you should get paid fairly for it," Wolf said in a statement. “This important step will put more money into the pockets of hardworking people and will help expand the middle class in Pennsylvania."

Labor unions applauded the move, but it drew quick opposition from business groups that also had cheered when federal courts blocked a similar move by former Democratic President Barack Obama.

A handful of other states with higher minimum wages require overtime pay for salaried workers above the federal baseline, although Wolf's proposal would appear to put Pennsylvania on par with the states with the highest thresholds, including California, New York and Alaska.

Wolf's administration said the regulation would phase in the increase over three years and eventually cover 460,000 more salaried workers, or about 8 percent of Pennsylvania's estimated payrolls of nearly 6 million. It would require that salaried workers earning up to almost $48,000 a year in 2022, or about $920 a week, get time-and-a-half pay for any time they work over 40 hours in a week. In 2020, the threshold would rise to $31,720 annually, or $610 per week, and in 2021 to nearly $40,000, or $766 per week.

Pennsylvania's current threshold is set at the federal baseline of $23,660, or $455 per week, which took effect in 2004. The state last raised its overtime threshold by regulation to $250 per week in 1977, the administration said. That is comparable to about $1,000 in today's dollar value, using the federal government's online inflation calculator.

Wolf's proposal, like Obama's, also would cover nonprofit organizations, from social services providers to higher education institutions.

PA Chamber opposedWorker-advocacy groups say that some employees often put in far more than 40 hours a week and end up making less than the minimum wage. In Pennsylvania, an employee can earn as little as $24,000, and still be ineligible for overtime pay, the groups say.

Business advocates warned that it would force employers to cut back hours and pay.

The Pennsylvania Chamber of Business and Industry's president and CEO, Gene Barr, said it will increase the cost of doing business, create more burdensome record-keeping for employers, make workplace schedules less flexible and potentially reduce pay for former salary workers.

The National Federation of Independent Business' Pennsylvania director, Kevin Shivers, called Wolf's move “an election-year stunt" while David Taylor, president and CEO of the Pennsylvania Manufacturers Association, said the decision on overtime is best left to employees and employers.

“Every time that the government intervenes in the market, it makes jobs more expensive, and whenever things get more expensive you get fewer of them," Taylor said.

The move comes after Wolf has spent three years fruitlessly asking the Republican-controlled Legislature to increase the state's minimum wage, which is set at the federal minimum wage of $7.25 an hour.

Republican lawmakers haven't budged on Pennsylvania's minimum wage, leaving Pennsylvania in the bottom half of states.

Obama's administration tried in 2016 to more than double the federal overtime threshold by regulation to $47,476, or $913 a week, but it was blocked by a federal court in Texas after 21 states sued and it was never enforced. Still, some businesses had adjusted pay scales or overtime pay policies to accommodate Obama's rule before the court blocked it.

Republican President Donald Trump's administration has not taken action to increase the federal baseline for overtime pay.

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